Microsoft and Yahoo! – My Take

A favorite theory
among tech pundits is that the company that will eventually dethrone Google
doesn’t exist yet. Rather, it’ll be the brainchild of former Googlers who quit
when their current job becomes boring or their stock options vest. Imagine a
mass exodus – hundreds of very rich, very smart engineers with nothing but
free time and creativity on their hands.

I like that idea. It has a certain romanticism to it. But what if the next,
great tech giant doesn’t come from a Googler – but a Yahoo?

If (when) Microsoft buys Yahoo!, how many developers will stick around for
what is sure to be a righteous clash of cultures? In his letter to Yahoo!,
Steve Ballmer writes that Microsoft intends “to offer significant retention
packages to [Yahoo!’s] engineers.” Forty-four billion dollars
is certainly enough to buy the company. But does Microsoft have enough money
to buy the loyalty of Yahoo!’s engineers? Many of whom are working at Yahoo!
precisely because they don’t want to work for a company like Microsoft.

Could this be the deal that launches a thousand Silicon Valley startups?
There’s no shortage of creativity brewing at Yahoo!. Attend any one of their
internal Hack Days
and you’ll find a wealth of amazing ideas and side-projects just waiting for
the right opportunity. How many of those could turn into successful businesses
if they were taken outside the company? I’d wager quite a few. And how many of
those could turn into the Next Great Thing?

There’s bound to be at least one.

I have no doubt Steve Ballmer and the rest of Microsoft have examined every
conceivable financial outcome of buying Yahoo!. I’m sure they’ve given great
thought to how the two companies will combine their infrastructures. I’m sure
there has been much talk of “synergy.” But as it’s become increasingly clear
that Microsoft just doesn’t get Web 2.0 and the disruptive power a social
network can wield, I wonder if they understand the implications of a thousand
new startups — each working in parallel to finish the job that Google
started.